365 Data Centers Goes After SMBs

Telecom turnaround artist John Scanlon is back, this time as the CEO of 365 Data Centers, which re-launched today with a new corporate identiy and a focus on the opportunity in providing data center services to small to medium-sized businesses (SMBs).

365 Data Centers, previously known as 365 Main, is a private-equity owned company that operates 17 U.S. data centers in medium-sized metro areas such as Indianapolis, St. Louis, and Nashville. Its signature is a flexible pricing models that lets customers pay for data-center and cloud services as they grow, with no long-term contracts.

Today 365 Data Centers also introduced 365 Quick Start, a colocation services bundle aimed at improving the data center experience and the channel. Customers can buy it online and don’t have to sign a long-term contract.

Scanlon, a veteran telecom executive who turned around metro fiber Yipes and sold it to India’s Reliance Communications for $300M in 2007, took over 365 Data Centers in January. He says that most big data-center operations operate mostly as real-estate landlords who want to lock clients into big, long-term contracts, which is not friendly to most businesses.

“The long-term lease agreements are arduous,” says Scanlon. “When you think about the obligation of a customer that’s growing to make a 3-5 year decision on a commitment, it doesn’t fit with their growth plans.”

Scanlon says the big data centers have also been pushed by their investors into the REIT (Real Estate Investment Trust) model, which doesn’t meld well with the technology goals of many growing companies. He wants the data-center company pursuing a more flexible, technology driven model.

“Think of us as more as a hotel than a rental apartment. Switching costs are so high. We are trying to bring the data center services into line with telecom and software industry.”

Backed by Housatonic Partners and Crosslink Capital, 365 Data Centers has about $50M in revenue and is now cash-flow positive. The company bought 17 data centers from Equinix in 2012. Scanlon says if the company can execute on its model, which is to pursue media-sized urban areas that may not be saturated with the big data-center competition, there is accesss to “unlimited capital” for expansion.

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Raynovich is the VP of Research and Analysis at SDxCentral Previously, he was Chief Analyst and Publisher of The Rayno Report (www.raynoreport.com), which was acquired by SDxCentral in October of 2015. Considered an expert on networking and service-provider technology, he has been covering these areas as an editor, analyst, and publisher for 25 years. He was the Editor in Chief and Editorial Director for Light Reading for a decade, where he started the Heavy Reading Insider research service. Prior to joining Light Reading, Raynovich was Investment Editor at Red Herring, where he started the New York Bureau and helped build the original Redherring.com Website. He has won several industry awards, including an Editor & Publisher award for Best Business Blog and a Folio award for Best Website. His analysis has been featured on prominent media outlets including NPR, CNBC, The Wall Street Journal, Bloomberg, and the San Jose Mercury News.

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